In the new issue of Regulation, economist Pierre Lemieux argues that the recent oil price decline is at least partly the result of increased supply from the extraction of shale oil. The increased supply allows the economy to produce more goods, which benefits some people, if not all of them. Thus, contrary to some commentary in the press, cheaper oil prices cannot harm the economy as a whole.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

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Tag: jeffrey immelt

The angry Left has been calling for President Obama to fire Jeffrey Immelt from his position as head of the President’s Council on Jobs and Competitiveness. I think that would be a good idea, but for different reasons.

Sen. Russ Feingold, Moveon.Org, and the regular scribes at the Huffington Post see Immelt, the chairman and CEO of General Electric, as unfit to advise the president because GE invests some of its resources abroad and, despite worldwide profits of $14.2 billion, paid no taxes in 2010. No illegalities are alleged, mind you; GE — like every other U.S. multinational — responds to incentives, including those resulting from tax policy and regulations concocted in Washington.

But there are more substantive reasons for why Immelt is unfit to advise the president. In particular, GE is a major player in several industries that President Obama has been promoting as part of his administration’s cocksure embrace of industrial policy. With over $100 billion in direct subsidies and tax credits already devoted to “green technology,” President Obama is convinced that America’s economic future depends on the ability of U.S. firms to compete and succeed in the solar panel, wind harnessing, battery, and other energy storage technologies. Concerning those industries, the president said: “Countries like China are moving even faster… I’m not going to settle for a situation where the United States comes in second place or third place or fourth place in what will be the most important economic engine of the future.”

Well, just yesterday GE announced plans to open the largest solar panel production facility in the United States, which nicely complements its role as the largest U.S. producer of wind turbines (and one of the largest in the world). The 2011 Economic Report of the President describes the taxpayer largesse devoted to subsidizing these green industries:

[T]he Recovery Act directed over $90 billion in public investment and tax incentives to increasing renewable energy sources such as wind and solar power, weatherizing homes, and boosting R&D for new technologies. Looking forward, the President has proposed a Federal Clean Energy Standard to double the share of electricity produced by clean sources to 80 percent by 2035, a substantial commitment to cleaner transportation infrastructure, and has increased investments in energy efficiency and clean energy R&D.

And Box 6.2 on page 129 of the 2011 ERP conveniently breaks out those subsidies by specific industry, most of which are spaces in which GE competes.

Tim Carney gave his impressions of this budding relationship between GE and the Obama administration in the DC Examinerlast July:

Look at any major Obama policy initiative — healthcare reform, climate-change regulation, embryonic stem-cell research, infrastructure stimulus, electrical transmission smart-grids — and you’ll find GE has set up shop, angling for a way to pocket government handouts, gain business through mandates, or profit from government regulation.

One month after President Obama proposed subsidizing high-speed rail because, in his words, ”everybody stands to benefit,” the head of GE’s Transportation division proclaimed, “GE has the know-how and the manufacturing base to develop the next generation of high-speed passenger locomotives. We are ready to partner with the federal government and Amtrak to make high-speed rail a reality.”

About the optics of these related events, Carney writes: “This was typical — an Obama policy pronouncement in close conjunction with a GE business initiative. It happens across all sectors of the economy and in all corners of GE’s sprawling enterprise.” And he goes on to list other examples.

Jeff Immelt should step down as head of the President’s Council on Jobs and Competitiveness because there is simply no avoiding a conflict of interest. Even if he recommends courses of action to the president that don’t advance GE’s bottom line, it’s hard to see how that wouldn’t be an abrogation of his fiduciary responsibility to GE’s shareholders.

But more troubling is that Immelt and the president appear to be two peas in a pod when it comes to faith in government-directed industrial policy. Immelt admires the German model of industrial policy because the Germans believe in “government and business working as a pack.” He admires China’s “incredible unanimity of purpose from top to bottom.” And days after Obama’s inauguration, Immelt wrote to shareholders:

[W]e are going through more than a cycle. The global economy, and capitalism, will be “reset” in several important ways. The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner.

Citizens of a country that owes so much of its unmatched economic success to innovation and entrepreneurship and an absence of heavy-handed top-down mandates should be wary of the changes the presdient and Mr. Immelt are fostering.